Being Social

Saturday, February 2, 2013

I have been mixed on the Roberts ObamaCare decision. On the one hand ObamaCare is still law, but on the other hand Roberts severely handicapped the law. It should be remembered that not only was the mechanism to force the states to set up exchanges rescinded, but the funding mechanism was severely crippled.

Would you choose to pay $20,000/year for family basic insurance, the cost of insurance, or pay the $2000 fine for not getting insurance? That is an $18,000/year shortfall for every family that makes the rational choice. But...

More importantly Lambert explains the reasoning behind Justice Roberts conclusion that the penalty was a tax and how the tax has to be relatively small in size (not punitive) and how the tax must remain the same amount adjusted for inflation. That is, the “tax” can not be increased per the Roberts decision except via an inflation adjustment which means the tax remains relative in size to the inflation adjusted Obamacare insurance premium. Therefore the tax remains relative and hence it will always be rational to follow the Lambert formula of paying the tax and acquiring coverage only as needed. The only exception to the formula is if health-care prices fall but Obamacare does precious little to address the underlying health-care price.